With a tweak of the Golden Visa rules, Dubai has seen an unprecedented spike in real estate demand. In July 2022, the total real estate sales transactions jumped 61.7 percent higher than the July 2021 numbers and touched a whopping AED 20.8 billion. Indians are on top of the list in terms of buying properties in Dubai, followed by UK, Italy and Russian oligarchs in 2022, according to a recent report by BetterHomes. In 2022, the UAE is expected to attract an inflow of 4,000 millionaires, the largest inflow globally in 2022, according to the Henley Global Citizens Report 2022.
On April 18, 2022, the UAE Cabinet approved an overhaul of the country’s entry and residence system, adding several new visa options and introducing other initiatives intended to increase the UAE’s attractiveness as a destination in which to live, work, and invest. The new rules will come into play from September 2022.
Under the new rules, the investment limit has been lowered from the previous high of AED 5 million (INR 10.4 crore) to AED 2 million (INR 4.2 crore). This drastic cut has prompted a huge spike in real estate demand in Dubai. In July 2022, the total sales transactions jumped 61.7 percent and touching a whopping 20.8 billion, the total sales value was 85.5 percent higher than July 2021 numbers.
And rich Indians are on a property buying spree in Dubai. According to a recent report from the real estate management firm Betterhomes, Indian nationals top the list of buyers of property in Dubai, followed by buyers from the UK, Italy, Russia, and France.
Since 2004, Indians have been among the Top 3 nationalities to buy properties in Dubai, having bought real estate properties worth AED 83.62 billion in the last five years (2015-21), according to statistics from the Dubai Land Department (DLD).
In 2019, Indians contributed 16 percent of the housing sales in Dubai sales by volume – pushing in more than AED 8 billion into the sector.
According to DLD, Indian nationals have already invested $3 billion into various freehold and leasehold realty projects in the city. Indian buyers have consistently been the biggest foreign investors in the emirate's real estate, given its strategic location, high investment and rental yields, capital appreciation and transparent regulations, DLD added.
Rental income: Other than the Golden Visa, what is the big draw of buying property in Dubai? The city offers average rental yields of 7 percent. Compare that to New York (2.8 percent), Singapore (2.5 percent), London (2.6 percent) and Hong Kong (2.3 percent). Plus, a sound capital appreciation because the Dirham is staked to the US Dollar, thus not affected by the fluctuations in currency.
Also, the Dubai real estate market is highly regulated. Investors are protected by, and the developers are accountable to, a strictly implemented Real Estate regulation Authority.
RBI remittance rules: The liberated remittance scheme of the Reserve Bank of India allows an Indian investor to officially transfer $250,000 to Dubai every financial year. Under this scheme, a couple can transfer $500,000 each year which can be used as real estate investment in Dubai.
Indians constitute 43.5 percent of the total UAE population and individual remittances from the UAE to India are between $12 million and $15 billion annually.
Impact of CEPA: The historic India-UAE Comprehensive Economic Partnership Agreement (CEPA) that came into effect on May 1, 2022, is expected to increase the total value of bilateral trade in goods to over US$100 billion and trade in services to over US$ 15 billion within five years.
“Indian companies can easily shift base to Dubai because the UAE now allows 100 percent foreign ownership in 122 economic activities across 13 sectors. The zero duty access to the UAE will be a big incentive for Indian production houses in key domestic sectors to set up base in the UAE. Add to it, ease of doing business, good infrastructure and tax benefits that will prompt this shift, which, in turn, will lead to more real estate purchase in Dubai,” says Shalini Lambah, Chief Executive (India), Migrate World.
Real Estate Trends in Dubai
In July 2022, the total sales transactions jumped 61.7 percent and touching a whopping 20.8 billion, the total sales value was 85.5 percent higher than July 2021 numbers. In July, there were 7,138 sales transactions (apartments: 4,843, villas: 1,536, Commercial: 342, Plots: 417), according to DXBinteract.com. The Top 5 performing areas by sales volume were Business Bay, Downtown Dubai, Dubai Marina, Dubai Creek Habour and Palm Jumeriah.
This year (up to May 2022), the total transaction volumes reached 30,903, the highest total recorded since 2009. The year so far has also seen average residential property prices in Dubai increasing by 10.9 percent: apartment prices rose 9.6 percent and villa prices are up 19.8 percent, according to the latest Dubai market report by CBRE, a global full-service commercial real estate and investment organisation.
Though the average price per square foot stood at AED 1,102 (INR 23,500) for apartments and at AED 1,307 (INR 28,000) for villas in May, the current rate is 25.9 percent and 9.5 percent lower, respectively, in comparison to the real estate highs witnessed in late 2014, CBRE said.
Apartments in Downtown Dubai topped the list of highest average sales rate per square at AED 2,045 (INR 43,800), while Palm Jumeirah led the villas segment, with prices at AED3,207 (INR 69,000).
Luxury Hotel Apartments for Investors
Located in the centre of The World Islands, Dubai, the luxurious 5-star 839-room Cote d’Azur Hotel which will open in September 2022 is offering studio and 1-bedroom units to investors. Starting at 457 sq ft, the first floor studio costs AED 1,385,920 (USD 377,316) while a one-bedroom apartment on the first floor is priced AED 2,480,273 (USD 675,253).
According to worldislandsdubai.com, the return on investment for a studio apartment on the third floor which costs AED 1,404,800 (USD382,389) will be a guaranteed 8.33 percent per annum for 12 years. The rental will be managed by the hotel and the income is tax free.
What has changed for Golden Visa holders?
• Investors, entrepreneurs, scientists, outstanding students and graduates, humanitarian pioneers and frontline heroes are among those eligible for the Golden Visa.
• Allowed to reside in the UAE for 10 years (previously, 5 years). The visa, which can be used as an entry visa for six months as well, can be renewed on expiry.
• Sponsor family members, including spouse and children regardless of their age, and sponsor unlimited support services such as maids.
• Can stay on in the UAE without the backing of a sponsor or employer.
• There is no restriction on the maximum duration of stay outside the UAE in order to keep the Golden Residence valid. Earlier, visa holders had to return to the UAE every six months if they travelled abroad but that rule has been done away with.
• In the event the original holder of the Golden Residence visa dies, his or her family members can now stay on in the UAE until the permit expires.
• Besides, entrepreneurs/investors can also get a 10-year residence visa by investing in a startup in the UAE under the new laws.
• Scientists and researchers with high achievements and influence in their respective fields can get the Golden Visa based on a recommendation from the Emirates Scientists Council.
• The processing time for the residence application is three months from the submission of the application to its approval.• Previously only available to select government employees, Golden Visa holders will now receive an exclusive government-issued discount card, called the Esaad card that gives exclusive access to offers and discounts on the purchase of cars, reduced premiums on health, insurance plans, and offers on dining, stay and spa treatments.